Income Tax Department Plans to Appeal to the Supreme Court Regarding High Court Decision on Order Validity

The Income Tax Department is considering appealing to the Supreme Court against a Delhi High Court ruling. The ruling stated that any Income Tax assessment order issued without a Document Identification Number (DIN) has no legal standing.

In April, the Delhi High Court supported the provisions of a 2019 Central Board of Direct Taxes (CBDT) circular that made DIN mandatory for issued documents.

According to a CBDT circular dated August 14, 2019, any communication by an Income Tax Authority (ITA) without DIN is considered invalid and is deemed to have never been issued.

The absence of a DIN in an IT order is seen as a technical glitch at most. Several instances occurred where, due to technical difficulties, the DIN was not mentioned in the order. However, according to a government source, several previously issued orders are now deemed legally invalid with the Delhi High Court ruling.

The Income Tax Department is contemplating filing an appeal in the Supreme Court. The process for filing the appeal is in its final stages, and expert opinions are being sought, as per the source.

In a case before the Delhi High Court, the Income Tax Department argued that the failure to generate and allocate a Document Identification Number (DIN) is, at most, a mistake or a defect that can be covered under Section 292B of the Income Tax Act. They contended that this should not invalidate the assessment proceedings.

However, the High Court disagreed, stating that the argument relying on Section 292B is not acceptable, considering the wording in paragraph 4 of the Central Board of Direct Taxes (CBDT) 2019 circular.

Delhi High Court ruling establishes two crucial legal positions. Firstly, it emphasizes that circulars issued by the CBDT are binding and mandatory, and the tax department must refrain from deviating from the methodology prescribed by the CBDT by claiming a mistake or omission. Secondly, the High Court ruled that non-compliance with the CBDT circular constitutes a jurisdictional error and cannot be rectified using Section 292B.

In light of this Delhi High Court judgment, taxpayers have filed various writs in courts where DIN is missing. He mentioned that the tax department may be considering challenging the High Court's order, especially in cases of time-barring notices or orders where DIN can not be applied later to validate such orders.

Also Read: November 2023 Witnesses Highest Year-on-Year Growth Rate of 15% in GST Revenue Collection

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